Nutraceuticals: The Hottest Trend in Beauty Today

By Ewa Hudson, Research Manager, Euromonitor International | September 15, 2009

Despite a flagging economy, consumers continue to maintain high interest in beauty foods and supplements.

As consumers clamor for products that help them look young and stay in good health at any cost, nutraceuticals represent one of the hottest categories within the beauty industry right now. This is because the concept of prevention is one that resonates well with beauty consumers—after all, the mantra “you are what you eat” is familiar to everyone.

However, the high profile February 2009 withdrawal of Danone’s Essensis beauty yogurt from its home market in France may have cast doubt among some about the viability of the industry in light of the global recession. But most analysts agree that this is a minor setback for functional foods in general, and beauty foods in particular.

The good news is Essensis being pulled from the market has done little to dissuade other players from tapping into the nutraceuticals trend, with several high profile launches proliferating recently, particularly in the U.S. market.

For example, in May 2009, Functionalab unveiled a range of 100 products in the U.S., spanning beauty foods, drinks and supplements. Sold primarily in department stores, the company is taking a consultative approach to marketing the products. And at a cost of around $100-$200 for certain ranges, Functionalab is clearly taking a long-term view beyond the recession to selling its concepts.

Skin Care Segmentation Sparks Similar Trend in Nutraceuticals

It is fast becoming apparent that skin care—more specifically anti-aging products—is one of few areas in beauty that has performed well during the global recession. Sales continued to grow at a 10% clip from 2007 to 2008, demonstrating that beauty is one area where consumers are unwilling to sacrifice. As the segment grows, skin care products are becoming increasingly specialized and segmented by the type of problem they treat, as well as targeting different parts of the body. These trends are beginning to be mirrored by the new group of “beauty-from-within” products.

Nutraceutical products as they pertain to personal care generally focus on three areas—skin, hair and nails. In the skin segment, nutraceuticals address a range of problems, including skin repair, pigmentation issues, firmness, whitening, slimming and aging. For hair, nutraceutical products claim to aid growth, restoration, nourishment and volume, while nail-specific products concentrate on improving strength and the overall appearance of nails.

But the wide scope of nutraceuticals has moved beyond simply enhancing beauty, and now includes: sun protection from within (Bronzage Sublime by Juvamine; Innéov Solaire by Nestlé & L’Oréal); anti-cellulite (Nivea anti-cellulite body care range); men’s hair recovery (Wellman Tricologic by Vitabiotics); acne treatments (BioAktivni Acno, launched in the Czech Republic in 2008); and skin whitening and skin radiance (Cartidea launched in Croatia in 2008). As interest in the market continues to grow, more specialized products will become available.

Eating Beauty

In terms of product format, nutraceuticals for beauty are traditionally offered in pill, tablet, liquid and food forms. Foods and drinks positioned and marketed as “beauty enhancing” are part of a newer concept, with the rise of added-value functional foods becoming the next logical step for innovation in the cosmetics and toiletries industry.

Beauty foods are largely split into two groups: those incorporated into indulgence foods such as chocolate and those that sit under the health and wellness umbrella. One of the most recent launches in indulgence foods includes Dove Vitalize and Beautiful chocolate, which was launched by Mars in the U.S. in February 2008, promising better looking skin—that product was recently withdrawn. Choxi, another beauty chocolate from Prestat, recently appeared on the shelves of Boots, one of the largest pharmacy chains in the U.K.

In Japan, Meiji Seika launched Perfect Plus. The product is a cheesecake with 1000 mg of collagen per cake and 225 kcal. It is aimed at female consumers interested in a guilt-free alternative to standard indulgence foods.

Yogurt and yogurt drinks are the most popular formats for beauty foods, because unlike chocolate, yogurt already has a healthy image among consumers, which makes it easier to persuade them that beauty yogurts will have a positive effect on their appearance and well-being. Furthermore, the target audience for nutraceuticals is overwhelmingly female and typically aged between 25 and 50. Moreover, they’re already accustomed to seeing yogurts marketed with additional health benefits such as digestive tract improvement, so the format also makes sense for beauty foods.

Recent innovations in this arena include NEO Beauty from Wimm-Bill-Dann in the Russian market—a dairy drink with aloe vera, antioxidants, minerals and vitamins, Nestlé SA in Mexico has also unveiled a new yogurt called Svelty Piel Día y Noche. It contains CoQ10, which is reputed to make the skin softer. This particular product calls for consumption in the morning as well as at night.

Beauty Beverages: Paying the Price

Beauty drink manufacturers have encountered some difficulties in persuading consumers to trade up to their products, which are often priced at a premium compared to other functional drinks targeting the health and wellness market. For example, Glowelle, introduced to the U.S. market by Nestlé in the latter half of 2008, is a drink containing antioxidants, vitamins, botanicals and fruit extracts to enhance natural beauty.

Glowelle retails at a hefty $7 per bottle, far above that of other functional beverages in the market. To be able to command such a premium, Nestlé decided to retail the drinks exclusively through department stores instead of selling them alongside ordinary drinks in grocery stores. However, as business in high-end distribution channels has fallen dramatically, this tactic may need to be readdressed.

Borba Skin Balance water, on the market since 2005, is a portfolio of drinkable skin care products said to help various conditions. The line is sold primarily through European specialist beauty retailer Sephora. When the line was introduced, company president Scott Vincent Borba dismissed any possible threat from lower-priced products, saying: “We pioneered the category. Even if they come in at a lower price point, they’ll never meet the clinical criteria that we have nor will they beat the emotional branding we have with our consumers.” It remains to be seen if this will hold true as more and more competitors enter the U.S. beauty beverage market.

Grobli Beauté is a new range of beauty drinks that launched in 2008 in the Austrian and German markets, which contains CoQ10, L-carnitine and inulin. Also positioned as being low calorie, the product should perform relatively well as it targets image and weight conscious females and has a clear marketing message about the benefits of its added ingredients.

Beauty Supplements

Beauty supplements represent another highly lucrative area of nutraceuticals. According to Euromonitor International, sales of beauty supplements generated nearly $2.5 billion in sales in 2008, which amounts to 7% of the total global expenditure on dietary supplements.

Lycopene, a powerful carotenoid found in tomatoes, is currently one of the most popular ingredients in beauty supplements. The ingredient was initially marketed on the basis of its cancer fighting properties, but manufacturers soon uncovered its other versatile health benefits and decided to reposition it as a beauty enhancer. There are two leading brands available that include lycopene: Imedeen, a beauty supplement from Ferrosan, is marketed to help to stave off the aging process; and Inneov, a product resulting from a collaboration between Nestlé and L’Oréal, is a skin and hair supplement.

Another popular beauty supplement brand is Perfectil, a supplement from Vitabiotics that supports the development of skin, hair and nails. It contains, among many other ingredients, grape seed extract, carotenoids, vitamin D, biotin and manganese.

Other products have not proved so successful. Procter & Gamble’s Olay brand of vitamins, a cross-category brand extension, was withdrawn in 2006. A more successful cross-category move includes Nivea’s Good-bye Cellulite beauty supplement, which is designed to be used in conjunction with its anti-cellulite cream carrying the same name.

Beauty-from-Within: A Global Concept

The vast majority of global beauty supplement sales are concentrated in Japan, which generated $923 million in 2008; 16% of all supplements sold in the country are positioned as beauty supplements. The main reason for their popularity relates to the sophisticated legislation (FOSHU or “Foods for Specific Health Use”) system in Japan, which governs the sale of many nutraceutical products.

The Japanese Ministry of Health and Welfare assesses the quality of products and only issues
the FOSHU seal of approval if products meet its stringent standards. As a consequence, this classification system lends a degree of credibility to products, which in turn drives sales of nutraceuticals in the country.

The popularity of beauty supplements in Japan is undoubtedly a result of their wide availability. In fact, there are specialty retailers that sell only beauty supplements. Further, the presence of respected Japanese cosmetics giant Shiseido in the sector offers strong support for nutraceuticals.

China is beginning to catch up with Japan, with numerous introductions taking place in 2008. The economic boom in China has raised overall levels of affluence and increased consumer interest in personal appearance, in turn stimulating a greater willingness to spend money on health, fitness and beauty products. Because of these factors, the market for beauty products is growing rapidly, reaching an impressive $640 million in 2008. Traditional cosmetics and toiletries players such as Avon China have started to offer beauty-related vitamins and dietary supplements, as more female consumers are concerned with both inner and outer beauty. These women believe that taking beauty-enhancing vitamins and dietary supplements regularly is beneficial to skin care.

In Western Europe, nutraceuticals are prevalent in a range of outlets, such as health food shops in Germany, a country where 11% of total supplements sold are beauty focused. This compares to less than 1% in the U.S.

The U.S. market, though comparatively small, is growing rapidly. In 2008, sales of beauty supplements totaled only $80 million, but it was by far the most dynamic growth market, with a 42% rise in beauty supplement sales, compared to 4% growth in the Japanese market. The dramatic rise is driven by consumers looking to maintain a youthful appearance and age gracefully. And with a sizable aging population, U.S. demand is expected to increase substantially.

Cosmetic surgery has been growing in popularity among men and women, and demand is similar to that seen before the economic downturn. There is an increasing trend, however, for more subtle, non-invasive surgery alternatives. In fact, more radical invasive surgery has dropped 9%. This has fueled a market for cheaper options, especially products that make people feel like they’re doing something to enhance their looks, but for less.

Nutraceuticals fit nicely into this new mentality in the U.S. and as a result are beginning to serve as cheaper, less painful options for many consumers compared to surgical procedures.

Confusion Leads to Short Lifespan for Some Products

So why did Essensis flop in one of the most beauty-obsessed countries in the world? And what does its failure mean for the wealth of other recent product launches that target beauty from within?

Danone claims the main reason behind the decision to pull the line in France was a drop in sales due to the troubled global economy. However, others believe the brand’s higher price point, coupled with a lack of consumer understanding about exactly why they should trade up, contributed to the line’s collapse.

Despite being positioned as a skin-enhancing food, Essensis does not contain ingredients that are overtly associated in consumers’ minds with improving beauty. Its main ingredients are vitamin E and green tea extract, and while both are widely known to be beneficial to health, they are also found in many other foods. The brand is still on sale in neighboring Spain, so only time will reveal its ultimate fate.

While increased consumer price-sensitivity is a big obstacle for most manufacturers today, consumer skepticism about the efficacy of nutraceuticals is a further barrier to growth. If consumers don’t understand what these beauty ingredients do and don’t see visible results within three months of consumption, they are unlikely to continue purchasing.

The failure of brands such as Essensis, Olay’s beauty supplement range and Dove’s Vitalize and Beautiful chocolate is proof that even with the marketing budget of a large multinational company, nutraceuticals in all formats are susceptible to failure if they are not marketed in a way that overcomes the high degree of consumer skepticism. The fact that such products are not regulated in most countries to the exacting standards seen in countries like Japan means that many would-be buyers are put off because they simply don’t believe that they work. Food supplements, in particular, have recently come under fire from medical practitioners as unnecessary and ineffective, especially compared to a balanced diet.

Despite an Unforgiving Economy the Market Continues to Grow

The recession may have dampened the appetite for experimentation, but consumers’ desire to look good is as strong as ever, prompting them to seek out cheaper ways to achieve beauty. The continued success of anti-aging products, many of which are premium-priced, is further proof that luxury beauty goods do not always suffer during times of economic difficulty. Indeed, many consumers see anti-aging products as a cost-effective preventive measure compared to expensive plastic surgery in the future. The trick for nutraceuticals players will be to persuade consumers that their products are also a long-term beauty investment.

Effective marketing strategies will be a key component to achieving this. It will be vital for manufacturers to communicate effectively and succinctly exactly why consumers should trade up to a nutraceutical product and that ingestible beauty products can be a viable alternative or complement to the creams and cosmetics designed for external use. Lastly, as obvious as it may sound, product efficacy will also be vital. Goods that do not produce effective results are bound to have a fairly limited lifespan regardless of the economic climate.

About the author:
Ewa Hudson is research manager with Euromonitor International, Chicago, IL. She can be reached at 312-922-1115; Website: www.euromonitor.com.